The legal battle between Ripple and the SEC continues to drag on. Now an email from the agency has surfaced that raises new questions.
The US Securities and Exchange Commission (SEC) is accusing Ripple of selling non-registered securities (security tokens) with XRP in a legal battle that is still ongoing. The accused company’s latest argument is that the SEC failed to evaluate XRP at all for years. Moreover, employees of the agency would have invested in XRP highly themselves. According to now published documents, things are getting tight again for the Securities and Exchange Commission. Because according to media reports, an email testifies that the SEC has never internally set rules against holding or trading the cryptocurrency.
Our ethics office has the ‘Prohibited Holdings’ list, which refers to securities that fall under 5 C.F.R. 4401.102(c)(1). BTC, ETH and XRP have never appeared on this list,
the email states.
Is the SEC acting in its own self-interest in the Ripple cause?
The revelation came in the context of whether the SEC is required to disclose internal considerations about crypto securities classifications. This includes valuations of BTC and ETH in addition to XRP. The judge in charge, Netburn, is yet to conduct an in camera review on this. This issue is critically important because neither BTC nor ETH have been classified as securities by the SEC. But when it comes to Ripple, the agency insists exactly that: that XRP should be a security. Moreover, the SEC did not call XRP one in its rules against holding securities.
But it appears as if the Securities and Exchange Commission has expanded its jurisdiction without congressional oversight or judicial interpretation. A very old 1933 law has been extended to new circumstances. That law states that the SEC’s jurisdiction is limited to stocks only. An expansion must require an act of Congress, but that did not happen in the case of Ripple. Clearly, the entire system of balance of power breaks down if the SEC can represent its own interests in its decisions and influence the market price to its tradable advantage.
The key question behind this whole revelation story now is why the SEC should be empowered to play the role of enforcer in the Ripple dispute when it would benefit from its own decision. This lack of separation casts significant doubt on whether the SEC is even fit to regulate cryptocurrencies.